Crane Corporation makes four products in a single facility. Data concerning thes
ID: 2590165 • Letter: C
Question
Crane Corporation makes four products in a single facility. Data concerning these products appear below: D-$1,820,000 Products Selling price per unit Variable manufacturing cost per unit Variable selling cost per unit Milling machine minutes per unit Monthly demand in units $35.30 $30.20 $20.80 $26.00 $16.50 $15.80 $7.90 $8.50 $3.80 $1.60 $1.90 $3.30 3.30 1.70 2.102.50 4,000 1,000 3,000 1,000 The milling machines are potentially the constraint in the production facility. A total of 22,600 minutes are available per month on these machines. Up to how much should the company be willing to pay for one additional minute of milling machine time if the company has made the best use of the existing milling machine capacity? (Round your answer to the nearest whole cent.) A-$11.00 B- $0.00 C-$4.55 D-$15.00 WhenExplanation / Answer
Option C. Is correct=$4.55
Optimal production plan:
$15.00
(35.30-16.50-3.80)
$12.80
$11.00
$14.20
The company should be willing to pay up to the contribution margin per minute for the marginal job, which is $4.55.
Product A product B product C product D Selling price per unit 35.30 30.20 20.80 26.00 Variable manufacturing costs per unit $16.50 $15.80 $7.90 $8.50 Variable selling Cost per unit 3.80 1.60 1.90 3.30 Contribution margin per unit$15.00
(35.30-16.50-3.80)
$12.80
$11.00
$14.20
Milling machine minutes per unit 3.30 1.70 2.10 2.50 Contribution margin per minute $4.55 $7.53 $5.24 $5.68 Ranks in terms of profitability 4 1 3 2